Housing bubble?

There has been a lot of buzz going around lately about the rapidly increasing housing prices in the Portland area. Many people are concerned that we are headed for another housing bubble and we will see a decrease in home values following the “pop”. Well I am here to tell you I don’t think we will see a drop in prices any time soon. While I don’t have a crystal ball, and definitely can’t predict the future, If we look at the statistics, you can see we are nowhere near the bubble of 2007/2008. First we will start with the graph that is making people nervous. As you can see the average sales price at the end of 2014 is just under the peak back in 2008. We ended last year with a price of $333,000 and in 2008 the average sales price was $342,000.

This graph does make it seem like we are headed for another crash, but I don’t think it is coming. Below is a more accurate graph that helps to break down where we should be and where we have been since 1991.

The 4% appreciation line shown in red is where we want housing prices to be year over year. It is based on historic averages to show a healthy market. When you look at this graph you can very clearly see a bubble forming starting in 2006. Then we can see the recession, where at its worst houses depreciated by 12.1% over the course of a year. Ever since we began the slow recovery in 2011, we have been trying to catch the historic appreciation line. We are just about there and we should see housing appreciation slow down to a healthy climb.

If you have been on the fence about getting into a home because you think you will overpay or lose value in your home in the next couple of years, stop stressing and get your self into the market! Interest rates can’t stay this low for much longer, and the longer you wait, the more expensive that perfect house will be. If you have further questions or would like to see more statistics, please reach out and I am happy to send them over to you. If you are ready to start looking at homes, I know a great Realtor!